Is the SEC Endorsing… Climate-Conscious Investing?
The Fennel Newsletter
What’s the news at Fennel? New “news” is the news!
(In our best “newsboy” accent, of course.)
We recently updated the app to provide some quality of life improvements to the in-app news feature. This includes things like: more news sources, the ability to read news directly from its source, and more.
News is yet another tool that can help inform your investments in-app, with stories including press releases, corporate actions, and company mentions in the media. On top of that, Fennel provides positive/negative sentiment analysis for the articles it features, for a little extra context.
Don’t take our word for it — check it out in the app yourself!
What We’re Talking About
SEC Adopts Landmark Climate Rule — Here’s What It Means for Public Companies (Yahoo Finance)
What happened: The SEC adopted a landmark rule that requires large public companies to disclose certain climate risks. As part of their SEC registration and annual filings, large public companies will have to disclose:
Climate-related risks that have had (or will likely have) an impact on business,
- How those risks affect company strategy going forward,
- How management or board of directors plans to oversee climate risks,
- How the company assesses its climate risks,
…and a handful of other climate-related reports. (You can read the SEC’s summary of these disclosures here.)
In addition, large public companies are also required to disclose their Scope 1 and Scope 2 emissions. Meanwhile, smaller public companies and growth companies have more flexibility in how they disclose their climate risks, and are not required to report emissions.
Why We Care: This rule has been in the making for about two years, and it’s attracted a lot of attention from both climate activists and corporate lobbying groups. The fact that it was finally adopted could imply that regulators are starting to take seriously the financial impacts of climate change.
However, it lacks one notable thing: any mention of “Scope 3” emissions. While “Scope 1” and “Scope 2” emissions involve a company’s first- and second-hand carbon emissions, Scope 3 includes carbon emitted by a company’s suppliers and customers, which can radically alter a company’s total carbon footprint.
For example, Scope 1 and Scope 2 emissions of an oil company don’t include the carbon emitted when its customers actually use the gasoline it sells — that would be Scope 3.
Only time will tell whether this new rule goes far enough to actually change anything, as many large public companies already report their Scope 1 and Scope 2 emissions or issue annual sustainability reports.
Question is, do we have the time to spare?
Shareholder Votes
Should Disney add extra board seats? (April 3) — If you’ve been following the shareholder drama at Disney this year, you may be aware that the company is facing activist investors on two different fronts.
One of these investors is Blackwells Capital, a group that has recently been increasing its stake in Disney. Blackwells considers Disney’s real estate holdings to be especially valuable, representing about 44% of its market cap. They believe that Disney could spin out these holdings into a separate company or trust to generate extra capital, and they’ve nominated three people to run for seats on Disney’s board to explore potential growth strategies.
Blackwells put forward a shareholder proposal that supposes Disney should expand the number of seats on its board, which could potentially be interpreted as an olive branch to the company on behalf of Blackwells. In the case that Blackwells’ nominees win over Disney’s candidates, the company-nominated candidate(s) could still have a seat too.
However, Disney recommends that investors vote against the proposal, arguing that increasing the size of the Board to override the election results wouldn’t be in the company’s or shareholders’ best interests, even if the resulting vacancies would be filled by board-recommended nominees.
Why would Disney’s board advise voting against a proposal that was supposedly written to benefit it? Maybe, just maybe, there are some internal politics at play that average shareholders aren’t aware of.
Are you reading this on Medium or did someone forward this to you? Sign up for our newsletter to get the latest on ESG & stakeholder capitalism sent straight to your inbox.
The information contained in this communication and any attachments is for information purposes and should not be regarded as an offer to sell or a solicitation of an offer to buy any. It does not constitute a recommendation or consider the particular investment objectives, financial conditions, or needs of specific investors. The price and value of the investments referred to in this email communication and the income from such investments may fluctuate, and investors may realize losses on these investments, including a loss of principal. Past performance is not indicative or a guarantee of future performance and information is subject to change. Online trading has inherent risk due to system response, execution price, speed, liquidity, market data and access times that may vary due to market conditions, system performance, market volatility, size and type of order and other factors. An investor should understand these and additional risks before trading. We do not provide tax, accounting, or legal advice to our clients, and all investors are advised to consult with their tax, accounting, or legal advisers regarding any potential investment. The information and any opinions contained in this email communication have been obtained from sources that we consider reliable, but we do not represent such information and opinions are accurate or complete, and thus should not be relied upon as such. Fennel Financials LLC is a broker-dealer registered with the U.S. Securities and Exchange Commission, a member of FINRA and a member of SIPC. Such registration does not imply a certain level of skill or training.
Fennel’s newsletters are for informational purposes only, and are not a recommendation of an investment strategy or to buy or sell any security in any account. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided does not reflect the views of Fennel Markets, Inc., Fennel Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk including the loss of principal and past performance does not guarantee future results. View our disclosure page for more information.
